Jobs creation: A critical concern in 2025
Amidst growing concerns over rising unemployment in the country, the latest figures released by the Employees’ Provident Fund Organisation (EPFO) offer a glimmer of hope. The EPFO has recorded a net addition of 13.41 lakh members during October, reflecting the increased employment and higher awareness of employee benefits among workers, according to the Ministry of Labour and Employment. The EPFO enrolled around 7.5 lakh new members in October, out of which a significant 58.49 per cent are in the 18-25 age group. The net number for this dominant age group is 5.43 lakhs.
Compared to the earlier data, it becomes discernible that most individuals joining the organized work-force are youth, primarily first-time job seekers, indicating the increasing employment opportunities in the economy. Another key development is that among the new additions around 2.09 lakh are new female members. The rise in female member additions reflects a broader shift towards a more inclusive and diverse workforce.
It may be noted here that it is the EPFO Payroll Data that gives an idea of the level of employment in the formal sector. According to the government, more than 1.3 crore net subscribers joined EPFO during 2023-24. During September 2017 to August 2024, more than 7.03 crore net subscribers joined EPFO, indicating an increase in the formalisation of employment.
While the data points to improved employment scenario in the country, for India to gain from its demographic dividend, there is a need to generate productive/formal employment for about 7 million youth who join the labour force every year. According to a recent report by Goldman Sachs Economic Research - ‘What is driving job growth? - in the last 23 years, around 196 million jobs were generated in India. As economists, analysts and even RBI RBI Deputy Governor Michael Debabrata Patra point out, the pro-spects for agriculture and, thus, rural consumption are bright. However, there is a need to create more jobs and shift more and more rural youth into formal sector. The Sachs report estimates that India needs to create around 10 million jobs annually.
It is said that until 2035, the Indian working age population will remain around 69% and the proportion will slide below 60% by 2050. That means the country has just a 20-year window to reap demographic dividends. As the country rings in New Year, the central and the state governments must push for measures to smoothen irritants to spur economic growth.
The GDP growth slowed to a seven-quarter low of 5.4 per cent during the July-September period. Though the RBI has downgraded its GDP growth forecast for 2024-25 to 6.6% from 7.2% earlier, Finance Minister Nirmala Sitharaman says the slowing of Q2 growth is a “temporary blip”. The Goldman Sachs report hits the nail on the head when it suggests prioritising three policy measures for creating jobs in India. There is a need to incentivise affordable social housing development as real estate sector employs over 80% of construction workforce. The governments have to help shift IT hubs and global capability centres to tier 2 and tier 3 cities. They should come up with fiscal incentives for labour-intensive sectors. Last but not the least, governments have to particularly address the mismatch between skills and industry needs. Educational testing services firm Wheebox has found that only 51.25% are “employable,” as measured by a skills-assessment test. Other studies also lend credence to this grave reality of a nation which has the largest and youngest workforce. There is a need to overhaul the educa-tion system and promote industry-academia collaborations. This is crucial to maintain India’s economic momentum.